Posts Tagged ‘socialism’

Milton Friedman once joked that if you put the government in charge of the Sahara Desert in five years there would be a shortage of sand. He could have been talking about Venezuela and its oil wealth. But it is no joke.

On Monday Caracas missed interest payments due on two government bonds and one bond issued by the state-owned oil monopoly known by its Spanish initials PdVSA. Venezuela owed creditors $280 million, which it couldn’t manage even after a 30-day grace period.

Venezuela is broke, which takes some doing. For much of the second half of the 20th century, a gusher of oil exports made dollars abundant in Venezuela and the country imported the finest of everything. There were rough patches in the 1980s and 1990s, but by 2001 Venezuela was the richest country in South America.

Then in 2005 the socialist Hugo Chávez declared that the central bank had “excessive reserves.” He mandated that the executive take the excess from the bank without compensation. Today the central bank has at best $1 billion in reserves.

Falling oil prices are partly to blame, but the main problem is that chavismo has strangled entrepreneurship. Faced with expropriation, hyperinflation, price controls and rampant corruption, human and monetary capital has fled Venezuela.

As of Tuesday evening, the Investment Swaps and Derivatives Association still had not declared Venezuela in default. That matters because this will trigger the insurance obligations inherent in the credit default swaps. But S&P Global Ratings declared the country in default Monday. On Tuesday morning the Luxembourg Stock Exchange issued a suspension notice for the bonds with missed payments.

The public-safety infrastructure in Venezuela has been degraded to such a degree that citizens now take justice into their own hands. Agence France Presse reported that lynchings have risen sharply over the last year and a half as political and economic instability in the crumbling socialist republic has worsened. Witnesses who spoke to AFP said a 22-year-old man who was set on fire at an anti-government demonstration in May was actually lynched after being accused of stealing by the crowd – not because he was a government sympathizer, as President Nicolas Maduro had suggested at the time.

Protestors set fire to the Venezuela Supreme Court. “The incident comes after the Supreme Court voted to reject a motion blocking Maduro from rewriting the country’s constitution, despite recent polls showing that up to 85 percent of Venezuelans oppose the reforms.”

Tearing down a statue of Hugo Chavez doesn’t get you sent before a civilian judge, it lands you before a military tribunal:

Maduro is following the playbook of other tyrants facing the collapse of socialism page by page. The anger in the streets against his failed regime is so intense that protesters might not be convicted in a jury trial handled through the regular order of civilian law enforcement. So instead, the troublemakers are being rounded up and taken off to face a court martial in an environment which the government can closely control.

There’s also a Washington Post piece that asks if Civil War is imminent I’m not linking to because the words “starvation” and “hyperinflation” are conspicuously absent. As the Hot Air piece on military tribunals states, “the citizens are effectively in a state of war with their own government” already…

The problem with reporting on the slow-motion trainwreck that is Venezuela is the “slow-motion” part. Things fall apart, children die, people starve, but it’s hard to gauge the rate at which the ship of state is slipping under the iceberg of reality due that giant gash of socialism in its side.

An economy in shambles, lethal street crime, dungeons packed with political prisoners, and South America’s worst refugee crisis — it’s hard to find a misery that Venezuelan President Nicolas Maduro’s government hasn’t visited on his compatriots in his four years in office. But by calling for a new constitution (Venezuela has had 26) as he did this week, Latin America’s ranking strongman may well have trumped his own dismal record.

On May 1, with the streets of Caracas and other major cities teeming with anti-government protests, Maduro announced a plan to convoke a constituent assembly to write a new constitution. As anti-climactic as that sounds, this was an autocratic milestone even for the country that has turned political and economic fiat into a science. In a single flourish, the Venezuelan leader proposed not just to bend the rules, as he has done repeatedly since coming to power in 2013, but also to junk the latest constitution — which his predecessor, Hugo Chavez, fashioned into a tyrant’s toolbox — and cherry-pick a Bolivarian dream team to deliver what will presumably be an even more authoritarian one.

If the proposal stands, as virtually all of Maduro’s decrees have stood to now, the new law in turn would bury the cherished trope among contemporary Latin American strongmen that their word, no matter how arbitrary, is still anchored in democratic process. “Maduro’s proposal was not just flagrantly unconstitutional. It was the most radical move in more than 17 years of Chavismo,” said Diego Moya-Ocampos, chief political risk analyst at IHS Markit, a London-based business consultancy.

Brazilian foreign minister Aloysio Nunes went further, labelling Maduro’s proposal a “coup” and a breach of democratic civility. “Maduro chose to radicalize,” Nunes told me in an interview. “This proposal is incompatible with the democratic process, slams the door on dialogue, and is a slap in the face to the Pope’s appeal for a negotiated solution.”

There are elements of dictatorships that are unmistakable. Today I must refer to one more in Venezuela: the passing of civilians to military justice.

Venezuela´s civic-military regime represents the worst of every dictatorship. That includes tyrannical control over political freedoms and the basic guarantees of the people, the elimination of the powers of the branches of government of popular representation, political prisoners and torture, starting with the armed collectives, a kind of fascist blackshirts, with orders to attack civilians during protests.

The accusations of military prosecutors to civilians is absolute nonsense in juridical terms.

In Venezuela, the rule of law does not exist even in appearance.

The accusations of crimes of vilification and instigation to rebellion, as well as other categories of a similar nature, are part of a reactionary discourse devoid of legal grounds applied against demonstrators. The reality is that they simply serve the purpose of depriving peaceful protesters of their freedom.

When a government considers that its people are a threat to its continuity it is because it is a government whose strategy is to continue without the people and on the basis of the use of force.

This constitutes a new violation of the Constitution, which in its article 261 says clearly that:

“The commission of common crimes, human rights violations and crimes against humanity shall be judged by the courts of the ordinary jurisdiction. Military courts jurisdiction is limited to offenses of a military nature.”

More scenes from the disintegration of Venezuelan society over the last few months:

“Last year, the average Venezuelan living in extreme poverty lost 19 pounds amid mass food shortages largely created and then exacerbated by government price controls—60 percent of Venezuelans said they had to skip at least one meal a day. Maduro joked that the ‘Maduro diet,’ as the government-induced starvation has been called, was leading to better sex, to the applause of government workers and party loyalists but few others. There have been shortages of food as well as goods like toilet paper, deodorants, condoms, and even beer.”

“Venezuelans are fleeing to Brazil for medical care…A spiraling economic crisis and hyperinflation have cleaned Venezuelan hospitals of needles, bandages and medicine. Desperate for care and often undocumented, patients are overwhelming Brazilian emergency rooms as they turn up by the thousands.” (Hat tip: Dwight.)

That hyperinflation was so bad that Venezuela outlawed their own currency. “In mid-December, the Venezuelan government surprised its citizens by withdrawing from circulation the 100-bolívar note, its largest and most used bill, with only 72 hours’ warning.” (Hat tip: The Other McCain.)

“The Venezuelan government is investigating alleged corruption in a $1.3 billion contract between the state oil company and a private contractor co-founded by a Saudi prince, according to law-enforcement officials and related documents.” Usual WSJ hoops apply.

Fracking means Venezuela will run out of money sooner rather than later. “A country like Venezuela, which was on the edge even before prices fell from $100 a barrel, well they’re running out of foreign exchange reserves, they’ve fallen from $66 to about $15 billion. And they’re collapsing and they’re running out of the ability to import food and other materials, and so there you’re dealing with almost societal instability, and order is being maintained by folks with guns.” (Hat tip: Stephen Green at Instapundit.)

The ongoing failure of socialism in Venezuela is one of those continuing stories that always threaten to turn post-worthy. This week’s Christmas season hook: the government’s Grinch-like seizure of toys:

Caracas, Venezuela (CNN)Venezuelan officials have confiscated nearly 4 million toys from a toy distributor, accusing the company of planning to sell them at inflated prices during the Christmas season.

On Saturday, the government initially said it had confiscated 4.8 million toys. It revised the figure Sunday, putting it at 3.821 million.

Critics say the consumer protection agency, which targeted the toy warehouse this week, has become “the Grinch that stole Christmas” because many families won’t be able to buy the confiscated toys for the holiday.

Agency head William Contreras disputed that, saying executives at toy distributor Kreisel-Venezuela, the largest of its kind in the country, “don’t care about our children’s right to have a merry Christmas.”

Except for Nicaragua in the 1980s, Venezuela has more wholly adopted Castro’s economic and ideological model than any other Latin American nation. The late Hugo Chávez took his cues from Castro on everything from his fondness for army fatigues to his 10-hour speeches. Chávez also adopted the Castro model of seizing private property, suppressing the independent media, hounding political opponents and making cause with rogues in Damascus and Tehran.

For a while Venezuela escaped some of the inevitable consequences thanks to a flood of petrodollars. That’s over. Inflation is forecast to reach 1,640% next year. Caracas is the world’s most violent city. Hospitals have run out of basic medicines, including antibiotics, leading to skyrocketing infant mortality. There are chronic and severe shortages of electricity, food and water, as well as ordinary consumer goods like diapers or beer. Nicolás Maduro, Chávez’s handpicked successor, has put his leading political opponents in jail.

And there’s hunger. An estimated 120,000 Venezuelans flooded into neighboring Colombia to buy food when Mr. Maduro briefly opened the border in July. Desperate Venezuelans are trekking through the Amazon hinterlands to make it to Brazil. And, like Cubans, they are taking to boats, risking their lives to make it to the nearby Dutch colony of Curaçao. Where there’s socialism there are boat people.

Zero Hedge has been keeping track of the twists and turns of Venezuela’s ongoing hyperinflation:

Malnourished children who faint in class. Children who, in the worst cases, die from hunger, their bodies nothing but skin and bones, the outlines of their ribs visible.

Images like those have become common in Venezuela, where critical food shortages are pushing hundreds of thousands of children under a blanket of misery and hunger more often seen in the poorest countries in Africa.

“We are seeing cases not seen for 40 years,” said William Barrientos, a physician and part of the opposition bloc in the legislative National Assembly who produced and posted a video on YouTube to highlight the issue of malnutrition among Venezuelan children.

A mob of starving people advanced on the presidential palace chanting, “We want food”. They were met by soldiers and police dispatched by the tyrant from his lavish palace decorated opulently with a golden sun, giant rock crystal mirrors, sparkling chandeliers and towering oil portraits.

The scene wasn’t 19th century France, but 21st century Venezuela.

And if you are wondering why you haven’t seen it on the news, it’s because Venezuela is a Socialist disaster area that was once being used as a model by the left. Now it’s a place where the vast majority of people can’t afford basic food staples and a third are down to two or fewer meals a day.

Snip.

Venezuela, once a wealthy oil state, where the doctors offering “universal health care” have no medicine and starving people loot government stores looking for food, is yet another example. 50 people are dead in the latest food riots. Their graves are yet another “grave error” of the left.

Snip.

Venezuela needs 10 billion bank notes in its new inflationary economy, more than America, and it can’t pay for them. Or pay for anything else. It can’t afford to import food and it refuses to pay fair prices at home. Meanwhile eggs, at the official exchange rate, run to $150, McDonald’s fries for $126 and a pound of coffee for $85. Socialists may not believe in inflation, but inflation believes in them.

No wonder the people are starving.

Teachers sell passing grades to students in exchange for milk and flour. Lines at government stores are endless and an entire economy has been built on buying and trades spots on food lines. Fingerprint scanners are used to enforce milk rations. And a heavy military police and military presence is required to stop mobs of starving people from grabbing the food as soon as it arrives.

On June 2, 1816, Simon Bolivar landed in Venezuela and declared all slaves in Spanish America free. In 2016, the “Bolivarian Revolution” in Venezuela reinstitued slave labor on farms:

Venezuelan ministry last week announced Resolution No. 9855, which calls for the establishment of a “transitory labor regime” in order to relaunch the agricultural and food sector. The decree says that the government must do what is “necessary to achieve strategic levels of self-sufficiency,” and states that workers can be forcefully moved from their jobs to work in farm fields or elsewhere in the agricultural sector for periods of 60 days.

I’m sure if you went into Houston’s Fifth Ward or Atlanta’s south side and announced “Hey, due to a food emergency, we’re going to need to put you back on the plantations. But it’s only for 60 days!” I’m sure they’d be totally understanding…

This follows months of food riots. Animals are starving to death in Venezuela’s zoos because they can’t afford to feed them. “Danta from the Caricuao zoo died from hunger.” There you go, liberals: An animal with a name! Now we just wait for all that spontaneous outrage…

So what is country whose people are literally starving due to the Magic Power of Socialism™ to do? Why, institute censorship, of course! And why reform your failing socialist econmy when you can threaten to arrest international executives because their local factories can’t produce goods due to a lack of raw materials?

Leftist leaders around the world love proclaiming “Socialism or Death!” But as Venezuela proves yet again, socialism is death…

Is this the point where the bankrupt socialist regime changes course and implements economic reform? Of course not. “Venezuelan President Nicolas Maduro announced a sweeping crackdown Saturday under a new emergency decree, ordering the seizure of paralyzed factories, the arrest of their owners and military exercises to counter alleged foreign threats.”

“Opposition leader Henrique Capriles also said the army must decide whether it is ‘with the constitution or with Maduro,’ a day before nationwide protests demanding the president’s ouster through a referendum.”

The government doesn’t just control the oil industry, imposing windfall taxes as high as 50 percent on the few private sector projects that remain. The government has nationalized rice mills, large producers of agricultural products, and expropriated millions of acres of farmland; it has acquired some banks and shut down others; nationalized the cement sector; tried to nationalize gold miners; nationalized the country’s largest steel mill and the country’s largest telecommunications company; expropriated the nation’s largest power producer (remember those rolling blackouts?), and more.

People close to the regime have benefited from many of those deals. Corruption has skyrocketed since the beginning of Venezuela’s “Bolivarian revolution.” According to the Cato Institute, $22.5 billion in public funds have been transferred from Venezuela to foreign accounts with no plausible explanation. Relatives of President Nicolas Maduro have been implicated in drug trafficking, with suspicions of drug money used to finance his campaign.

Oh, and Venezuela’s capital has earned the distinction of being the murder capital of the world.

All of these tragedies were avoidable. They are all the result of a mentality that sees only nails for the hammer of government control. Chavez and Maduro kept saying that everything that was wrong with Venezuela was the fault of markets and that if the government either eliminated or regulated those markets, things would get better. They implemented their agenda and it has been a disaster. This socialist brand of economic authoritarianism had the predictable consequence of political authoritarianism, corruption, and a breakdown of the rule of law.

How many more babies have to die before Venezuela abandons its failed socialist experiment?

In the course of this piece on Venezuela’s bankrupt socialist government using tanks against “paramilitary” opposition, I came across this tidbit of crime information:

The homicide rate in Venezuela is surging again in 2016, the Prosecutor General’s office warned in its first quarterly report of the year last week. Venezuela suffered 18,000 homicides in 2015 according to the Prosecutor General, but NGO’s put that figure closer to 28,000 murders for last year.

Even given that Latin American murder rates are generally higher than North America and Europe, that’s shockingly high for a nation of 30 million. In fact, both figures are more murders than for all of the United States for 2013 (the last year full FBI figures are available). And U.S. figures include such idyllic peaceful environs as Chicago, Baltimore and Detroit.

And life for Venezuelans who aren’t outright murdered continues to get worse. “The experiment with “21st-century socialism” as introduced by the late President Hugo Chavez, a self-described champion of the poor who vowed to distribute the country’s wealth among the masses, and instead steered the nation toward the catastrophe the world is witnessing under his handpicked successor Maduro, has been a cruel failure.”

What our country is going through is monstrously unique: It’s nothing less than the collapse of a large, wealthy, seemingly modern, seemingly democratic nation just a few hours’ flight from the United States.

In the last two years Venezuela has experienced the kind of implosion that hardly ever occurs in a middle-income country like it outside of war. Mortality rates are skyrocketing; one public service after another is collapsing; triple-digit inflation has left more than 70 percent of the population in poverty; an unmanageable crime wave keeps people locked indoors at night; shoppers have to stand in line for hours to buy food; babies die in large numbers for lack of simple, inexpensive medicines and equipment in hospitals, as do the elderly and those suffering from chronic illnesses.

But why? It’s not that the country lacked money. Sitting atop the world’s largest reserves of oil at the tail end of a frenzied oil boom, the government led first by Chavez and, since 2013, by Maduro, received over a trillion dollars in oil revenues over the last 17 years. It faced virtually no institutional constraints on how to spend that unprecedented bonanza. It’s true that oil prices have since fallen—a risk many people foresaw, and one that the government made no provision for—but that can hardly explain what’s happened: Venezuela’s garish implosion began well before the price of oil plummeted. Back in 2014, when oil was still trading north of $100 per barrel, Venezuelans were already facing acute shortages of basic things like bread or toiletries.

The real culprit is chavismo, the ruling philosophy named for Chavez and carried forward by Maduro, and its truly breathtaking propensity for mismanagement (the government plowed state money arbitrarily into foolish investments); institutional destruction (as Chavez and then Maduro became more authoritarian and crippled the country’s democratic institutions); nonsense policy-making (like price and currency controls); and plain thievery (as corruption has proliferated among unaccountable officials and their friends and families).

A case in point is the price controls, which have expanded to apply to more and more goods: food and vital medicines, yes, but also car batteries, essential medical services, deodorant, diapers, and, of course, toilet paper. The ostensible goal was to check inflation and keep goods affordable for the poor, but anyone with a basic grasp of economics could have foreseen the consequences: When prices are set below production costs, sellers can’t afford to keep the shelves stocked. Official prices are low, but it’s a mirage: The products have disappeared.

When a state is in the process of collapse, dimensions of decay feed back on each other in an intractable cycle. Populist giveaways, for example, have fed the country’s ruinous flirtation with hyperinflation; the International Monetary Fund now projects that prices will rise by 720 percent this year and 2,200 percent in 2017. The government virtually gives away gasoline for free, even after having raised the price earlier this year. As a result of this and similar policies, the state is chronically short of funds, forced to print ever more money to finance its spending.

Though much of it will be familiar to anyone who follows this blog, read the entire story, if only for the factory owner who got in trouble for not stocking his bathrooms with toilet paper as per union rules (because it was unavailable at government stores), only to get in even more trouble for “hoarding” when he bought it on the black market…

For all the depression over an ascendant Donald Trump, let’s remember remember that a lot of other countries, much further down the road to serfdom than we are, have it much worse.

Take, for example, Venezuela, where The Magic Power of Socialism™ has so wrecked the economy that soldiers are stealing goats to survive:

Over the weekend, six members of the Venezuelan military were detained by local authorities for stealing goats, the Venezuelan newspaper El Nacional reported Sunday. It said the soldiers confessed to stealing the goats and said they did it to feed themselves, since they had no food left in their barracks.

“It’s not a good sign when your military doesn’t have enough food, and when the military has been relegated to guarding and protecting food lines,” said Jason Marczak, director of the Latin America Economic Growth Initiative at the Atlantic Council. “This is endemic of the problems going on across the country.”

A military without enough food to eat. Boy, that’s a swell recipe for happiness in Latin America. (Hat tip: Instapundit.) As the Washington Post‘s Wonkblog put it: “It’s a grim race between anarchy and civil war.”

Venezuela’s right-wing opposition coalition, the Democratic Unity Roundtable (MUD), turned over 1.8 million signatures in support of a recall referendum against President Nicolas Maduro to the National Electoral Council (CNE) on Monday.

As part of the initial requirement to solicit a recall, the MUD was given 30 days to collect signatures from 1 percent of the electorate in each of the 23 states– 197,721 total signatures nationwide– a target which the coalition managed to surpass in a matter of days, accruing as many as 2.5 million overall.

There are still considerable barriers to a recall election even if the government doesn’t cheat (and what are the odds of that?).

In a tale that highlights the chaos of unbridled inflation, Venezuela is scrambling to print new bills fast enough to keep up with the torrid pace of price increases. Most of the cash, like nearly everything else in the oil-exporting country, is imported. And with hard currency reserves sinking to critically low levels, the central bank is doling out payments so slowly to foreign providers that they are foregoing further business.

Venezuela, in other words, is now so broke that it may not have enough money to pay for its money.

Snip.

Last month, De La Rue, the world’s largest currency maker, sent a letter to the central bank complaining that it was owed $71 million and would inform its shareholders if the money were not forthcoming. The letter was leaked to a Venezuelan news website and confirmed by Bloomberg News.

“It’s an unprecedented case in history that a country with such high inflation cannot get new bills,” said Jose Guerra, an opposition law maker and former director of economic research at the central bank. Late last year, the central bank ordered more than 10 billion bank notes, surpassing the 7.6 billion the U.S. Federal Reserve requested this year for an economy many times the size of Venezuela’s.

When you run out of money to print money, perhaps you should take that as a sign the express train to you socialist paradise has permanently derailed.

As part of its ongoing economic collapse, Venezuela’s government is now going from a four-day workweek to a two day workweek. Given the bang-up job the socialists have done running the economy, I suspect that will hurt less than the shortages of food and toilet paper.

His adversaries first need to collect nearly 200,000 signatures, representing 1% of the nation’s more than 19 million voters. The National Electoral Council, which is closely allied with the government, has 20 days to authenticate them. If that drive is successful, the opposition must then collect nearly four million signatures over three days before the end of the year to trigger an actual recall vote. To win that new election, they would have to garner more votes than the 7.5 million Mr. Maduro got in the 2013 election.

Typically this is the point (or long past it) where a third world nation’s military would declare “enough!” and depose El Presidente themselves. So far neither armed forces leader Vladimir Padrino Lopez nor National Guard leader Nestor Reverol have shown any signs of doing so…